Economic indicator showing signs of growth in 2013
January 29, 2013
By Manufacturing AUTOMATION
The Macdonald-Laurier composite leading index showed encouraging signs of growth in the Canadian economy in December.
The index rose 0.2 per cent in December to match upward-revised gains in October and November. But just as importantly, the breadth of growth in the index increased significantly, said Philip Cross, Macdonald-Laurier Institute (MLI) research coordinator and former chief economic analyst at Statistics Canada.
“Only one component contracted in December, compared with four declines the month before, while six increased and two were unchanged,” he said.
“The gradual improvement in the leading index – from no growth in July to diffuse gains by year-end – points to a pick-up in economic growth as 2013 unfolds.”
In the index the three financial components remained the most consistent sources of growth, rising in unison for the second month in a row.
Prices on the Toronto stock market rose for the third month in a row to reverse most of their declines over the summer. The TSX rally has been led by information technology and metals, both of which are up about 20 per cent from their lows in July.
The interest rate spread between the private and public sectors narrowed for the second straight month, reaching the smallest gap in more than a year. This is a sign of reduced concern about the risk of lending, Cross said.
Finally, the money supply capped a year of steady expansion with a 0.2 per cent increase.
Elsewhere in the MLI index, commodity prices in December held on to their 1 per cent gain in November.
The manufacturing sector rebounded from declines the month before. New orders recovered by 0.8 per cent, buoyed by the strengthening U.S. auto market. U.S. auto sales jumped 19 per cent in December, as ongoing replacement demand for a fleet that averages 11 years in age was supplemented by vehicles damaged by Hurricane Sandy. The average workweek at factories was unchanged.
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